241 A.3d 16
Md. Ct. Spec. App.2020Background
- Kimberly and Thomas Bartenfelder are the sole stockholders of two Maryland close corporations (Bartenfelder Sanitation and Bartenfelder Landscape) and co-members of an LLC.
- Kimberly sued Thomas and the companies alleging misuse of corporate funds and sought injunctive relief and appointment of an equitable receiver to operate the companies (not dissolution or liquidation).
- Thomas responded that Kimberly’s request triggered his statutory buy-out election under Maryland Code, Corporations & Associations § 4-603(a), and he elected to purchase her shares; he sought a stay while appraisers fixed fair value and bond was posted.
- The circuit court agreed with Thomas, ordered appraisers, set bond, and later confirmed appraisals that produced a purchase price; Thomas deposited funds into the court registry and the court declared the judgment satisfied.
- Kimberly appealed; the Court of Special Appeals consolidated two appeals and addressed (1) whether the equitable-receivership request (absent a dissolution petition) triggered § 4-603(a), and (2) related appealability/mootness questions.
Issues
| Issue | Plaintiff's Argument (Bartenfelder) | Defendant's Argument (Bartenfelder) | Held |
|---|---|---|---|
| Whether a complaint requesting appointment of a receiver (but not seeking dissolution) triggers the buy-out right in CA § 4-603(a). | The statute’s "receiver" reference is limited to receivers appointed in dissolution proceedings; Kimberly sought an equitable (non-liquidating) receiver, so § 4-603(a) does not apply. | § 4-603(a) uses the plain word "receiver" without qualification; any request for a receiver (or a receiver with statutory powers) triggers the buy-out right. | Reversed: § 4-603(a) applies only in the dissolution context (petition for dissolution); an equitable receiver outside dissolution does not trigger the buy-out election. |
| Whether the post-appraisal order and payment rendered the second appeal moot. | Kimberly argued the appeal remained live (funds remain in registry; bankruptcy stay of enforcement continues). | Thomas argued payment into court registry and Kimberly’s bankruptcy made the controversy moot and unappealable. | Denied mootness: funds remained in registry and enforcement stayed by bankruptcy court; appeal is not moot. |
| Whether the circuit court’s orders were appealable interlocutory orders. | Kimberly relied on interlocutory-appeal exceptions; the orders affected property/required payment. | Thomas contested appealability but did not prevail. | The Second Order (compelling payment for stock) was appealable under CJP § 12-303(3)(v); the First Order is reviewable as implicated by the Second Order. |
Key Cases Cited
- Spivery-Jones v. Receivership Estate of Trans Healthcare, Inc., 438 Md. 330 (2014) (explains distinction between equitable (chancery) receivers and statutory receivers in dissolution proceedings)
- Bontempo v. Lare, 444 Md. 344 (2015) (Court of Appeals: courts of equity may grant remedies short of dissolution for shareholder oppression)
- Edenbaum v. Schwarcz-Osztreicherne, 165 Md. App. 233 (2005) (recognizes equitable, non-liquidating receivership as an alternative remedy for oppression)
- Shenker v. Laureate Educ., Inc., 411 Md. 317 (2009) (discusses appealability under CJP § 12-303 and treats stock as personal property for interlocutory-appeal purposes)
- Anthony Plumbing of Maryland, Inc. v. Attorney General of Maryland, 298 Md. 11 (1983) (explain that ‘‘payment of money’’ orders traditionally rendered in equity may be immediately appealable)
- Papillo v. Pockets, Inc., 119 Md. App. 78 (1998) (discusses legislative purpose of close-corporation buy-out provisions and statutory construction)